By Waqas Samad, Group Director, Information Services Division
I had the great honour of participating in the closing bell ceremony at the Shenzhen Stock Exchange on Friday, to celebrate the inclusion of China A-Shares into the FTSE Global Equity Index Series. This is a big event in the global equity markets, with A-shares projected to be c. 5.5% of the FTSE Emerging Index, so it’s seen as a big event in China... and they certainly have a bell to match!
It was also a pleasure to meet senior executives from A-share companies that are being included and to hear some of their perspectives. The common themes they expressed were about the need for more engagement with international investors, the need for greater education and the focus that is needed on transparency and disclosure. While there is no doubt that international investors require further improvements in market structure and are working – along with their index provider of course – to reflect that to the Chinese regulators, it’s also clear that issuers in China need a greater understanding of what’s important to the set of international index investors that are now shareholders through the various Stock Connect schemes, such as London-Shanghai.
These A-share companies are more familiar with domestic retail investors, but expressed
It’s a two-way street of course and both sides need to get more from their exchanges, brokers and other intermediaries to help to bridge the gap. Monday’s inclusion is just the first step - this is Tranche 1 of Phase 1 - and there is much work to do to support investors and issuers alike so that they can realise the full potential of this new index inclusion.
As an index provider that has been working in China for nearly 20 years, we are excited to be part of this new wave in indexing!
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